Palcohol Learns an Important Brand Lesson – the Hard Way

PLEASE UNRING THAT BELL

Palcohol, a new brand of beverage alcohol, attempted an introduction into the U.S. market. What makes this brand different is that unlike its competition, it’s dry – really dry. It’s so dry, in fact, that it’s powder! Just add water or basically any liquid and voila, an alcohol beverage drink! The implications are truly game changing for the alcohol beverage industry.

If Palcohol is successful, they will have eliminated one of the major contributing factors to the cost of adult beverages – weight. Because liquids and the containers they come in are heavy, the entire infrastructure of the industry must accommodate that weight and space with large trucks, strong pallets, big forklifts, and giant warehouses. In the case of wine and craft beer, climate-controlled warehouses at that. In addition, it takes up considerable space on the retailers’ shelves. All of this results in a higher price to the consumer.

Over the years the industry has tried, with limited success, to eliminate the glass which is a major contributor to the weight and cost. Wine in boxes has been met with mixed reviews as many consumers believe that box wine must be cheap wine. So the bottom line is that wine, beer, and spirits are just plain heavy. This is why a powdered-alcohol brand has such potential. It’s light! The implications for convenience are both advantageous and potentially alarming at the same time.

Alcoholic beverages are a controlled substance with laws that regulate its manufacture and distribution, as well as where and how it is consumed. Examples of abuse are widely known and the industry, for its own sake, is extremely cognizant of those dangers and operates in strict compliance with all the laws regarding alcohol. Most alcohol brands say right on the package to drink responsibly.

When the Alcohol and Tobacco Tax and Trade Bureau (TTB) approved the labels, the Palcohol website was swamped because of the revolutionary nature of the product. People wanted to know more. But what they found was an irresponsible message about its “features and benefits.” From suggesting its use in alcohol-free college stadiums, to adding it to food for an “extra kick”; to not paying for mixed drinks or snorting it. We shudder at the implications of the website’s initial message and the damage it can cause to their brand and potentially to the reputation of a predominately responsible industry.

It is obvious that powdered alcohol has a great potential for abuse. Unlike liquid alcohol where the weight, cost and volume add controls of their own, a powdered-alcohol product can be more easily misused. So why should a new powdered-alcohol brand with such a revolutionary potential to take the weight, and thereby, much of the cost out of the price equation, come out of the gate focusing on potential misuse?

The TTB’s initial approval was first reported by Lehrman Beverage Law who said they were “absolutely astonished” that Palcohol was approved, adding that it “seems highly likely to raise a large number of legal issues and controversies.” Meanwhile, the TTB has rescinded its label approvals.

The Palcohol site has since been reworked to send a more responsible message, calling its initial site “edgy.” But can you un-ring the bell? We wonder what the producers were thinking that allowed those messages in the first place.

By allowing a “try anything” approach on its public website in the first place, Palcohol did not make the future of this otherwise revolutionary brand anything but controversial, and potentially stymied. The bell cannot be un-rung.

Who Are We.

Having built and sold a bestselling national brand, we appreciate the value of brands and everything it takes to make them successful. Companies are valued by their brand equity. Achieving and maximizing brand equity requires tremendous respect for all your customers, from your wholesaler to your end user.

Starting in our laundry room with no money and no knowledge of the industry, we built the famous Barefoot Wine brand. We learned a lot they don’t teach in school and much of it the hard way. Although our success was in consumer products, our real world experience will be helpful to anyone looking for information and advice about brands.

We have written the New York Times Bestselling Business Book, The Barefoot Spirit: How Hardship, Hustle and Heart Built America’s #1 Wine Brand, which chronicles the history of the famous brand from its inception through its acquisition. Our book is now required reading in schools of entrepreneurship across the country. We hope this book will provide inspiration and encouragement for all those contemplating starting a brand or wanting to improve their existing brand.